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Emission Trading to Reduce Traffic Related CO2 Emissions: Potsdam Institute
for Climate Impact Research (PIK) and the BMW Group are Introducing a Study
on Cap and Trade in the Transportation Sector.
BMW Group and PIK favor the use of emission trading also for transportation fuels
+++ Upstream determines CO2 content of alternative fuels +++ Automobile
manufacturers and fuel producers assume their respective responsibility
Munich/Potsdam. Biofuels, electricity, hydrogen: the world of fuels for automobiles will become even
more complex in the future. Electric cars, for example, are a solution to the challenge „Sustainable
Mobility“, since they are driven locally emission-free and, therefore, no longer directly emit CO2.
Dr. Thomas Becker, Vice President Governmental Affairs and responsible for the policy activities of BMW
Group, indicates the need for different framework conditions in the medium-term: „The relevance of the
upstream emissions increases in the traffic sector: Contrary to the fuel world dominated by gasoline and
diesel today, alternative fuels are produced with extremely different environmental impacts. The CO2
balance of one kilowatt hour of electricity that comes e.g. from a coal power station differs from one
that was generated by wind power significantly. Hence, in order to assess the actual CO2 footprint of a
certain fuel, we need the implementation of a new system."
This is particularly obvious with electricity: the CO2 emissions of electricity generated from renewable
energies, such as wind, water, or sun is in contrast to electricity generated from coal or natural gas. The
environmental impacts from biofuels are also defined mainly by its production. The comparability is
missing, when for example electricity and a mix of fossil diesel and bio-diesel will be competing in the
future for the lowest overall emissions. A long-term political framework is needed here that will address
the CO2 reduction in the traffic sector comprehensively and in a transparent way for industry and
consumer.
Study CITIES: The Solution is Cap and Trade
According to the study „Car Industry, Road Transport and an International Emission Trading Scheme“
(CITIES) developed under the direction of Professor Ottmar Edenhofer of the globally renowned Potsdam
Institute for Climate Impact Research (PIK), the use of an instrument is now recommended that enables
a treatment of the upstream emissions of fuels: Cap and Trade.
Used in Europe already within the scope of the emission trading for stationary systems, Cap and Trade
can in the future effectively reduce the total CO2 emissions in the traffic sector. A total volume of CO2
will be specified that is reduced annually. Every fuel will be comprehensively assessed according to the
climate impact of its production and use. CO2 certificates can be traded within the system. Thereby,
reaching the CO2 targets for fuels will be simplified, while trading CO2 certificates promotes a
competition for the introduction of innovative and efficient technologies.
Cap and Trade: An Effective Contribution to the Climate Protection in the Transport Sector
Professor Ottmar Edenhofer, the deputy director and chief economist at PIK, was authoring the study in
collaboration with Dr. Felix Creutzig. He describes the significance of the results: „The study CITIES
indicates how the energy sector, in addition to the innovations of the automobile industry, can
contribute to sustainable mobility. Going forward, the CO2 emissions will no longer be determined by
the automobile alone, but to a large degree by the upstream energy chain. To include the emissions
from the transport sector at the fuel production level will provide for a more stringent macroeconomic
treatment of the greenhouse gases. Simultaneously, a maximum flexibility and economic efficiency will
be guaranteed for the mitigation options. The respective responsibilities of the actors will be more
precisely defined with an emission trading for fuel producers and efficiency regulation for automobile
manufacturers“.
The study was commissioned and financed by the BMW Group. Dr. Thomas Becker explains: „Our task is
to increase the efficiency of our products, regardless of the drive concept. The legislative bodies and our
costumers rate us on that. Due to the increasing electrification of mobility and the use of biofuels and
hydrogen, most of the CO2 emissions depend on the upstream and no longer on the vehicle itself. Cap
and Trade is the correct lever for CO2 reduction in the upstream in an efficient, economical and
ecological manner. “
Important Results from the Study:
• In order to reduce CO2 emissions in the transport sector, all system participants must live up to
their respective responsibility. Fuel producers must reduce the CO2 content of their fuels;
automobile manufacturers must increase the efficiency of their products.
• The CO2 content varies considerably depending on the production method, regardless of the
type of fuel used. Automobile manufacturers have no influence on that. As a result, political
instruments must be created that specifically address fuel producers and automobile
manufacturers in their respective responsibilities.
• The introduction of emission trading for fuels is not supposed to replace the regulations on CO2
emissions for new cars. Rather it can bring forward the additional decarbonization of the entire
traffic sector in a comprehensive manner.
• Electric cars should be credited with 0 gr/km CO2 within the context of regulations on fleet
consumption, since the automobile manufacturers have no control over the origin of the
electricity. In the longer term, an efficiency factor (i.e. MJ/km) can be used that rates the car's
energy consumption technology-neutral for all kinds of propulsion systems, regardless of the
respective fuel.
• The CO2 content of fuels should be regulated at the level of the fuel producers, in order to
increase the efficiency of the regulation and provide incentives for CO2 reductions.
• In the light of changing conditions on the fuel market and the related CO2 emissions, Cap and
Trade is suitable as an instrument to holistically realize the CO2 reduction goals in the traffic
sector.
The complete study CITIES can be downloaded from www.bmwgroup.com/CITIES.
The study CITIES was authored by scientists of the Technical University Berlin and the Potsdam Institute
for Climate Impact Research. The department “Economics of Climate Change” at Technical University
Berlin researches the relations between mobility, economics and climate change. Scientists at the
Potsdam Institute for Climate Impact Research are working interdisciplinarily on researching climate
change and its impacts on ecological, social and economic systems. Professor Ottmar Edenhofer, as
deputy director and chief economist, heads the field of study Sustainable Solution Strategies at PIK and
has a professorship at TU Berlin. He is also co-chair of the working group III of IPCC, Dr. Felix Creutzig
is the Team Leader for Sustainability and Transport Economy at the Technical University Berlin and lead
author of the transportation section of the upcoming IPCC report.
For questions, please contact:
Group Communication and Politics
Dr. Thomas Becker, Political Communication
Mail: [email protected], Telephone: +49 89 382-49885
Media website: www.press.bmw.de
E-mail: [email protected]
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